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Pending Lawsuit

In: Social Issues

Submitted By mag2003
Words 343
Pages 2
Bank of America is one of the largest corporations in the nation; however they are hit with lawsuits almost every week. The lawsuits range from stockholders to customers. Most recent one being, a 50 billion lawsuits brought by Bank of America shareholders. When the market crashed (recession hit or financial crisis) in 2008, Bank of America acquired Merrill Lynch. The shareholders claim that the bank’s executives including former chief operating officer Kenneth Lewis failed to disclose a loss of $15.31 billion after the acquisition of Merrill Lynch. Shareholders believed that the loss was hidden to ensure they did not vote against the transaction. The bank disclosed the loss to the public after the acquisition of Merrill Lynch was completed.
It stated in the article that the bank and its executives knew about the losses months after the Merrill Lynch deal closed. Whether the bank’s intentions were to deceive the shareholders or not, it was unethical. Bank of America argued that the loss was uncertain and the loss would expected by the shareholders since Merrill Lynch was losing billions quarterly. In its defense, Bank of America believes that the disclosure of the loss was not material.
In my opinion, I do believe that it was wrong that Bank of America to hide the loss from shareholder and the public since they are a corporation. Nevertheless, it’s easy to sue big corporations such as Bank of America. Since they are hit with several lawsuits during the year, it’s likely that the bank will settle the lawsuit.
Ethically the bank would be held liable for the company's actions. It is their responsibility to adhere to (SEC) ethics and encourage a positive impact through their community, shareholders, and the public. I believed that Bank of America could have avoided the lawsuit had they been honest about the losses to the shareholders. This lawsuit could potentially hurt the company’s reputation. It would scare future investors, since they failed the disclosed their losses in order to keep the shareholders from voting against the acquisition of Merrill Lynch.

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